u.s. stocks hitting more records today. we start with breaking economic data. julie: we have the isn manufacturing report for the u.s. coming at 59.7. that is better than the 58.2 that had been estimated. 69, up from 65.5 in november, higher than the 64.5 that had been estimated. an interesting point as well as we look for any signs of inflation. a rise of 0.8% for construction. the exhilaration in december for completed a year that was the best for manufacturing in the u.s. since

2004. markets, isthe similar playbook to what we saw in 2017. records for the major averages. technology leading again. a pretty broad-based rally. energy and consumer discretionary also getting a lift today. let's talk car manufacturing. we are getting the december u.s. auto sales figures for the major auto manufacturers. we are seeing the numbers come in with declines in many cases. general motors down 3.3%. the estimate was for a decrease of 7.3%. ford posting unexpected gain in its sales of 1.3% as the f series had its best pickup since 2005. chrysler. 11% for via that matched the average analyst estimate. outside of stocks, we are taking

a look at the dollar today, which is seeing a bit of a rebound. the past five days of trading for the u.s. dollar, declines that add up to 5%. it is a pretty small one. on the flipside, we've been watching industrial metals recently. look at an index of industrial metals, we have seen that rally here. at the top is the price. on the bottom is the relative strength index. this is a sell signal. there are overbought conditions in the market, so the market he did that sell signal. prices of those industrial metals are down with a bit of a rebound in the dollar today. mark: we are up for the first yesterday, the first

trading day of the year. -- we will talk long and hard about it. treating bolling's 25% lower for we will delve deeper into the mifid ii story for you. the euro falling for the first day in six. 120.59 following the strong pmi data. we had comments discussing the end of the qe program. or ecb policymakers picking out. the austrian central bank governors has the close of asset purchases is within sight. the euro strength weighing on european stocks yesterday. today, stocks rising. this chart shows the declining

correlation between the euro, the blue line, and the stoxx 600 approaching a career-high. decline in inverse correlation. this is a wonderful chart as well. gold following for the first day in nine since the best run through july 2011. -- $1317 an ounce. we've highlighted that january decline. 3.5% onave risen average in the last 15 years. january is historically the best month for gold. let's talk about next, the big mover on european markets. it was up as much as 10%, now up a mere 6.7%. he lifted its profit forecast following a better-than-expected christmas.

this is a clothing retailer. an updated signal for retailers contending with brexit worries. the first major u.k. retailer to season it's aty the cost pressure will use over the next 12 months. the your ahead probably best year ahead probably won't be as -- the year i had to won't be as top as 2016. emma: president trump a warning for north korea's leader. the president tweeted that he has a much bigger and much --erful dust more powerful much more powerful nuclear weapon. diplomatic breakthrough between the two koreas. north korea told south korea the

hotline hasn't been used for two years. they will send a delegation to next month's winter olympics in south korea. more misery in store for the eastern half of the u.s. a deep freeze has already sent temperatures to all-time lows. is the so-called snow bomb expected to raise up the eastern seaboard tomorrow. parts of new york city make it four inches of snow. fox is in china -- we asked about reports of u.k. is in talks to join the transpacific partnership trade group. >> we are not ruling anything out. it's not something right at the top of our agenda at the present time. wrong fore quite us to rule anything out. emma: fox's the trade agreement

is -- fox says the trade agreement is somewhere down the road. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. vonnie: thank you. let's turn our focus to the year ahead. is outone's byron wien with his list of surprises for 2018. he joins us now to discuss his new predictions and how some of last year's surprises turned out. it was a pretty average year, six out of 10 or so. byron: i got some of the money making ones like the s&p 500, the price of oil, i got those right. vonnie: the important ones, right? let's start with president trump. last year, you said he would move away from the extreme positions of his campaigning and his policies would result in 3% growth.

you feel like you got is correct? byron: i do. you did in terror up all the agreements he said he was going to tear up and we did grow at 3% -- he didn't care up -- he didn't tear up all the agreements he said he was going to tear up and we did grow at 3%. we had 3% growth in the third quarter, which was besieged by two hurricanes. i think the underlying strength of the u.s. economy is very real. vonnie: before we get anything like an infrastructure plan -- byron: before the tax cuts kick in. vonnie: at what point do we see something a lot greater than that, then? it will be hard for us to grow much more. i think we will head toward 4%. i don't think we will get there. vonnie: when? byron: this year. vonnie: not at all.

you do see four federal reserve rate hikes. byron: i see the fed hiking rates. the actual momentum of the economy is such that the economy will plow through it. better than 3% all the quarters of 2018. mark: you say that is good for the dollar, yes? byron: i do. the dollar has been in the doldrums for a couple of years now. it will do better. mark: you didn't make a call last year that may be the euro would slip below parity. , it was close wasn't -- it was close, wasn't it? your call on the yen, maybe not so precedent. cient.sle byron: i think it can get to 120. mark: what about china?

what is the big talk on china? basically say china finally decided a nuclear capability in the hands of north korea could lead to action. what sort of actions? byron: china holds the cards. if china were to stop shipping oil and food to north korea, north korea, i think, would reduce its nuclear weapons threat. the fuelvides 90% of to north korea. they hold the cards. whichy took that action, so far the have shown no signs of doing, what if they took that action, that would neutralize north korea. vonnie: one of the more outside of predictions you are making for 2018? byron: nobody is challenging that one as not being a surprise.

vonnie: you say that you attribute more than 50% chance -- byron: i am signed on to them. i believe they have a greater than 50% probability. you would probably give them know better than one out of three. vonnie: talk to us about the price of oil. last year, you said it would remain below $60. this year, you are looking for to go above $80 a barrel. byron: they will reduce production from hydraulic fracturing and nigeria and venezuela and other countries. demand is rising because worldwide growth is increasing. that will drive the price to $80. vonnie: even with shale producers? byron: even with shale. mark: what about what's going on in iran? comevents that have

forward in recent days with the protests. some speculated whether trump will walk away from this nuclear deal. you don't think that will actually happen. byron: there are six parties -- they want to keep it going, even though at the end of 10 years, it expires. my believe is what we will see is that trump will not move away from it. it will stay on board . you may not sign all the inspection agreements, but he won't withdraw from the agreement as a whole. byron: another interesting call -- mark: another interesting fox talked about the possibility of britain joining the tpp. regret ofaybe trump's

pulling out of the tpp and he could pursue bilateral deals. then: china is becoming country of influence in asia. trump doesn't like to see that. he likes to see the u.s. being the center of influence throughout the world. my feeling is he will have second thoughts. i don't think much will come of it. the big call in the u.k. is that jeremy corbyn will become the next prime minister. mark: hold that thought. we will talk about jeremy corbyn in the next section. vonnie: we will get to europe and a lot of your predictions there. you do see a 10% correction to the s&p 500. it will finish the year much higher. byron: everybody is talking about a 10% correction. they talked about it throughout 2017. i think we will finally have it. i think it will be a correction, not the beginning of a bear market.

vonnie: hold some of those thoughts. we will come back with byron wien of blackstone. we will be focusing on the global economy and future of europe. this is bloomberg. ♪

london, timeom mar i am mark barton. vonnie: i'm vonnie quinn. back with byron wien from blackstone. we are analyzing his list of surprises. howtalk about populism and

it gave birth to a movement in the u.s. and also in europe. how has that run its course? the you see more to go with populism? byron: i thought merkel would have a tough time of it and she did. i thought she would lose, but she didn't. she's having trouble forming a coalition. wasbig 2018 surprise jeremy corbyn becomes the next feminis prime minister. i don't think people have factor thaed that in. britain was growing at 2% before the brexit vote. its growing at 1% now. the u.k. is hurting. confirmation from your counterpart overseas on that. that people are unhappy and they want change an jeremy corbyn

represents change. we have aps on the bloomberg today about outlook for brexit in 2018. we talk about various scenarios. among them is an election this year that leads to jeremy corbyn becoming prime minister, which is among your surprises of the year. if he becomes prime minister, the labour party will try to get close to europe. we haveyour assumption a corbyn led government, do we get closer to europe or do we move further away from europe? brexit election were held today, how to you think the u.k. would vote? with a vote to leave or remain?

-- who they vote to leave or remain -- would they vote to leave or remain? i don't think it is clear-cut. byron: that's why it is a surprise. it would be a surprise for corbyn to win. i think britain would try to move closer to europe as a result. vonnie: either way, what do you see happening with the british economy gdp wise? byron: right now, brexit remains the britishthink economy will be the slowest economy among the major countries in europe. sterling,eaking of you have a strong call for the euro and the u.s. dollar. where do you see sterling going next year? byron: i could see sterling going down. i could see it going back into the one 20's. -- the 120's.

call,i'm looking at your you say the electorate question, -- usefulness of the eu abandon the euro in terms of the national currency. do you sense with the election of emmanuel macron and merkel cobbling together a coalition, do you think the opposite might happen? will we see a further integration of the european union? byron: one of the things that brexit did was it brought the continental europe closer together. i was dead wrong on that. european union is stronger and more solidified today than it has been almost at any time in its history. i think europe is growing at 2%. and has a natural momentum now.

therefore, i think the idea of it breaking apart was wrong. --nie: before we get to that republicans lose control of both the senate and house of representatives. the you think there is more than a 50% chance of that happening? byron: i'm signed on to it. couldng the democrats take control of the house, that is not a surprise. thinking the democrats could take control of the senate when there are 34 seats at stake, 26 of them are democratic seats, eight republican, thinking the democrats can get control of the senate, that would be a surprise. it's based on a referendum of trump. you could argue and one of the things i've played around with, the american people feel that trump has been good for the m. the economy is growing at 3%.

i still think the democrats have a good chance of taking not only the house but also the senate. vonnie: we have to mention some also rounds. they don't make it into the top 10. bitcoin. the risks are so great that regulatory authorities restrict trading in the cryptocurrency. byron: that may not happen only because there's so many other currencies. you are beginning to see them focusing on the other cryptocurrencies, not just bitcoin. i'm not signed on to it. i don't recommend buying it or selling it. vonnie: we have to leave it there, unfortunately. our thanks to byron wien, blackstone's vice-chairman. coming in with his predictions.

honda down 7%. the roundup is next. this is bloomberg. ♪

mark: this is "bloomberg markets ." vonnie: time for our latest bloomberg business flash. year for u.s.ck auto sales. honda reporting december auto sales down 7% just a moment ago. that was worse than estimates. ford and a 2017 on a high note. deliveries rose 1.3% in december. gm sales fell less than economists were expecting. 11%,chrysler sales down in line with estimates.

a big takeover today in the energy business. dominion energy has agreed to buy -- they primarily serve gas and electric customers in the carolinas and georgia. it's been hurt by a failed nuclear project last summer. shares of advanced micro devices rising. microsoft and apple will have to find other patches to patch up their systems. that's the latest bloomberg business flash. stay tuned. more "bloomberg markets" ahead. this is bloomberg. ♪ is this a phone?

or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data.

see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. vonnie: live from bloomberg world headquarters in new york, i'm vonnie quinn. mark: i'm mark barton. this is "bloomberg markets."

an end to antigovernment protests in iran. the commander of the guard was -- 20 peopleing were killed in the protests. hundreds of iranians have been detained. president trump has threatened to cut off financial aid palestinian authorities. palestinian leaders have said the president's decision to recognize drizzle them as the capital of israel disqualifies the u.s. as a middle east peace mediator. does recognize jerusalem as the capital of israel disqualifies the u.s. as a middle east peace mediator. talks to hanging over prevent a government shutdown. it must also provide money for

the mexican border. can implement rate in germany has fallen to a record low. the jobless rate was 5.5%. a number of people out of work in germany fell t for strict -- the number of people out of work in germany fell for six straight months. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. vonnie: weatherwise, it has been a week to remember for many in the eastern part of the united states. boston tied a century-old record with seven straight days below 20 degrees fair in height. chicago just had its coldest new year's day ever. even parts of florida are in the 20's. snow was reported in tallahassee today. now, get ready for a huge snowstorm with potential blizzards curling towards new england. the same storm is expected to

grace the new york area tomorrow. how strange is the u.s. -- strained is the u.s. natural gas supply? davis -- gina a davis. what kind of pressure is this putting on supplies? >> we saw a record use of natural gas in the united states yesterday, which is kind of phenomenal. the other thing that has been interesting, in new england especially, we've seen a huge uptick in the amount of oil and burn for electricity. 35% of the power being used in new england. we are seeing a scramble to make sure there's enough power and natural gas. natural gas also being used as a heating fuel. vonnie: we have a lovely chart in the bloomberg natural gas consumption. record.terally at a

the last time was 2013 that it came even close, really. how our utilities and other suppliers coping? it's not just the amount. it is the speed at which people start using more. >> a great example of when you use those power plants that only get used a couple times he or. they are able to handle it. they haven't called for conservation yet. now, it seems ok. as you use more oil, that does raise questions about environmental issues associated with burning the oil and supplies. in the new york harbor, they've been using icebreakers to clear the way for these shipments to come in. mark: it is not just the weather there. here. experiencing int

give us an idea how bad it is. winds up to 100 miles per hour in the u.k.. what sort of impact is that having on normal life and energy markets? tina: we have seen some effect in terms of power outages, especially in ireland. what we haven't seen really is much of an effect in power markets in the region. very light trading and almost no trading in the u.k. markets. it hasn't rippled through yet to the power markets. reaching outages associated with high winds there. mark: we have dominion and scanner -- a stock or stock deal. target givenactive the scrutiny it is receiving from federal and state regulators. does this deal makes sense? tiuna: dominion is taking on a big risk.

it's taking on a wounded animal in this deal. share prices have tanked since the middle of last year when he announced they would not go forward with this rather expensive and already behind schedule nuclear power plant. what remains to be seen is whether the regulators rollout going forward. the governor has already expressed support. they have a big partner in these power plants. the governor wants to find a buyer for that as well. dominion has not said what the feek up the is -- breakup is. they've already offered a $1000 refund to their customers as soon as the deal closes. vonnie: dominion has been building this major natural gas pipeline to the south carolina border. what does it mean for the future of nuclear energy in the state? tina: still very dim. there's only one product still ongoing at this point. aey are having to go through

lot of match nations with their regulators to figure out how much their customers will be paying for this project. customers will be paying for it while even though the project will maybe never be finished. vonnie: thanks for all of your reporting on the weather and on supplies and this deal. that is tina davis. mark: coming right up on "bloomberg markets," british retailers might have something to be optimistic about. good tidings for a stock christmas. this is bloomberg. ♪

mark: i'm mark barton. vonnie: i'm vonnie quinn. this is "bloomberg markets." our stock of the hour, ulta beauty is rising after no upgrade and an ugly 2017. -- after an upgrade and an ugly 2017. julie: its gross margin performance was choppy, up and down. that have been a reason for bullishness around the stock in the past. comparable sales growth has been consistently high. the stock has performed well over the last several years. last year, it took that downturn. wells fargo giving it a price target of 275, up from 220. the margin performance is stabilizing in the holiday

season there were store promotions but it was better planned by the company and therefore won't squeeze the margins as much. analysts saying the company is hitting ian inflection point in its spend cycle. that should help margins. tax cut -- they should benefit from the tax cut. they have an effective rate of over 30%. it did not rise when the tax bill was passed like other stocks that have that kind of high tax rate. vonnie: it had been the wall street darling. generally, wells fargo is more favorable. there no today looking out to 2018. stronger --017 look looked stronger than it had been over the holidays.

really brought strength across retail. there's inventory management that has improved. wells fargo calls the inventory the cleanest since 2012. all of this notwithstanding, there are still challenges. amazon is still an issue. retail store traffic is still an issue as well as general e-commerce penetration. all of that said, it is still a cautious outlook for 2018, but with more of a positive bias. vonnie: thank you for that wonderful stock of the hour. mark: let's stick with retail as the theme. strongerrting christmas sales. it's the first major retailer to report in the holiday season. shares up 10% earlier in london trading. charles allen is here from bloomberg intelligence. is next a precursor to great

things from the high street or is it the exception to the rule? beat expectations but the sales were only up 1.5%. it wasn't as if it was a shooting the lights out. the timing of christmas this year and everything may be fooled some people that was obvious this week. we have seen that from the big department store -- we should have seen quite a strong last week and probably sales being positive. mark: 2017 wasn't the easiest of years for next and other retailers. what is different when you're on -- one year on? charles: people seem to have fallen back in love with fashion a little bit. and was definitely a structural change.

people just didn't want fashionable clothing. they were spending money on experiences and other things like that. the one or two looks that caught people's imagination at the end fashion is maybe back in fashion. mark: fashion back in fashion. but are we spending again? consumers are not? what about brexit related issues? peakes: we may have passed inflation -- next alluded to 2017, flat by the end of 2018. in that sense, may be a little less inflation in the shops. a lot of chatter in the u.s. about how brands are dealing with the digital rewards.

how is next online? charles: next online is the strong part of the business. it is still a bit smaller in terms of sales than the retail business. the online business is up over 3% in this. compared toeiord the stores down 6%. next is a pioneer of online retail. it started its online business back in 1998. mojo throughosing 2016, but as this year has gone through, its been regaining strength. we will see online sales continue to be strong. vonnie: what about brick-and-mortar for next? will it hang on to all the brick-and-mortar stores? havees: next management

been big fans of retail space. they kept saying they will build more and make an economic return. we caught a few comments today this just may be having a best there's some biases -- it's an meiosis between stores and symbiosis between stores and online. click and collect and merchandise returns are a big part in apparel. you need to have some stores. whether they have to have ever bigger stores is a big question. mark: they haven't been sucked into the pre-christmas discounting. its unlike many retailers. what about post-christmas discounting? what is the outlook for the industry? does next get involved in that? charles: it is tradition. you have a big sale on boxing

day, the day after christmas. they recognized that people are going to spend some of that money earlier now. that's why they put some merchandise into black friday clearance to recognize this shift in spending. a lot of retailers in the u.k. are being quite cautious about the amount of inventory they bought in this season. has 6% less stock going into in sales compared to last year. there are fewer bargains. ofnie: charles allen bloomberg intelligence. mark: time for the bloomberg business flash. let's begin with breaking news -- spotify has filed for an ipo. is music streaming service aiming to list in the first quarter. it is a direct listing instead of the traditional flow.

may have to rethink its global ambition. the financial services giant has abandoned the plan to find money -- roku isational getting deeper into competition with amazon and google. they are planning to roll out a digital voice assistant later this year. it is a free software update this fall. that is the latest bloomberg business flash. vonnie: still ahead, petrobras agrees to pay a giant settlement to u.s. investors who lost money after a massive corruption scandal. details, next. this is bloomberg. ♪

vonnie: this is "bloomberg markets." mark: let's talk about eastern europe. : and hungry battling with the eu -- poland and hungary battling with the you. the leaders of the two nations arrive in budapest to confer. -- wasapest bureau chief it a symbolic meeting? was it anything more than symbolism? >> the question for most, it was symbolism. we talk about the two black sheep of the european union. two countries pursuing a liberal policy, centralizing power and expending the government influence over the courts an independent institutions. both countries are facing unprecedented procedures within the european union, which is

calling for the suspension of their voting rights. mark: did the leaders discuss those procedures at that press conference today? a 40 minutewas briefing and there was not really a word of it. they were sidestepping the issue. you better be sure that they discussed this behind closed doors. the hunger in prime minister has veto if necessary to protect poland for many sanctions. he may have asked for solidarity in return as well. both given the reliance of of these countries on eu funding, is there a concern that funding might be cut if this escalates? is.: therzoltan: there

some countries have called for curbing european union funding. they are among the biggest beneficiaries of european union funding. this is one of the issues they discussed. the new polish prime minister said he would like to see a comment on budget talks. these budget talks will concern financing from 2020. the negotiations will already start in 2018. concern about funding cuts and the polish prime minister said even without any sanctions, because of the u.k.' exit from the european union, funding is set to fall significantly for both countries. mark: when it comes to brexit, what is the view out there within hungary and poland and

elsewhere in the eu? is brexit the bigger threat or the stand up with these eastern european nations? zoltan: these countries are first and foremost concerned cuts to theirng budget because of their specific policies, making sure they are at the table negotiating and getting good results from that. there is concern about brexit because the u.k. will eventually stop paying into the european union budget. their share of financing will fall. there's hundreds of thousands of people from hungary and poland who live and work in the u.k. they want to protect those rights of workers there as well. they obviously want to protect trade relations as well.

let's turn to brazil. the state-run energy giant petrobras has agreed to pay $3 million to the u.s. investors who lost money following that massive corruption scandal that page $3nown as -- billion to the u.s. investors who lost money. tell us what this might mean for the future of petrobras the company. thatis is the settlement is new for petrobras. $3 billion sounds like a large amount. investors were expecting something around $10 million. the settlement came in at a lower cost and came in earlier than anticipated. -- investors were expecting something around $10 billion. this sends a positive sign to the market. mostgan said it was the

significant uncertainty on the company. it was a large overhang. vonnie: what about the company more broadly and the presidency? temer has been caught up in this. who becomes president next? >> that is a very interesting question. we are heading to ian uncertain election with no favorite candidate. the whole market expects a centrist, market friendly candidate who has yet to emerge. it's really interesting that investors are so positive on brazil. havelian corporates matured enough to inspire confidence at this point. vonnie: and the brazilian recovery continuing. >> yes. up, we areg following stocks less than 35

minutes to the end of the west wednesday session. we declined yesterday. we are rising today. yesterday was the strong euro that wait on exports -- weig hed on exporters. volume 25% below the average. some describing that the onset mifid ii. this is bloomberg. ♪ .

mark: 11:00 a.m. in new york and 4:00 p.m. in london and midnight in hong kong. 30 minutes left in the trading day in europe. from london, i am mark barton. vonnie: i am vonnie quinn in new

york and this is the european close on bloomberg markets. ♪ mark: here are the top stories we are covering. the first day of trading under the new mifid ii regulations slow becausevolume of that or the holiday season? u.k. trade secretary in china trying to -- as brexit negotiations are in a critical phase. trumpolitics, president set to harden his stance on immigration as he gears up with the latest round of government shutdown negotiations. will it increase the chance of an impasse? equitieropean